Taxes in Mexico

For years, many of us have wondered why Mexico, with so many natural resources and hard working people, remains largely in poverty. Since volumes of analysis by people smarter than I have attempted to answer this, I’ll just add a couple of opinions based on my observations over a lifetime of Mexico study and travels. Many expats are drawn to purchase and live in Mexico because of the low cost of living, day-to- day. Whereas property taxes in the U.S. are used to fund multiple social services (schools, etc), in Mexico the taxes are so low that they fund very little. Property taxes on a $200,000 house are only about $200 per year. In fact, tax collection (corporate, income, etc) on a whole is very low in Mexico, totally about 10% of the country’s GDP, compared to about 28% in the U.S. So, you end up with a situation where people love moving to Mexico for the low taxes, but then bitch about not having paved roads, a well-paid police force, and crooked politicians…well, I guess those are everywhere you go.

Mexico has some very wealthy families, with Carlos Slim now the second richest person in the world. At least ten others in Mexico are billionaires. They have the highest GDP in Latin America, including Brazil. This in a country that has an average daily wage of about $400. Mexico has a majority of its wealth concentrated in a very small upper-class, with a small and shrinking middle-class. The majority are poor and sinking lower every year . Why, you ask? Well, it’s the same old story. The rich don’t want to invest, to pay taxes, to fund the programs that help to build a middle-class….good schools, health care, transportation corridors, a living minimum wage…the list is long. The wealthy control the politicians who write the laws and they don’t want to tax themselves. That’s the simple story.

There is much to like about Mexico. It’s my favorite place in the world. But they, as a country, need to enact reforms that will benefit the majority. In the long run, everyone would gain.